Better Late Than Never: Late Service Of Notice Of Amount Payable Under Section 6(D) Of The ISDA Master Agreement

Goldman Sachs International v. Videocon Global Ltd and another [2014] EWHC 4267 (Comm)

Goldman Sachs International (GSI) has recently succeeded on an application for summary judgment against Videocon Global Ltd (Videocon) on somewhat unusual facts. The short judgment of Mr Justice Teare (the Judge) reflects the continuing ability of the 1992 ISDA Master Agreement to generate previously undecided points of dispute in relation to its construction, notwithstanding more than 20 years' use. It is interesting to note that major market participants continue to use the 1992 form of the ISDA Master Agreement.

Section 6(d) of the ISDA Master Agreement requires that notice of the amount due on early termination (and details of the account to which it should be paid) must be provided on or as soon as reasonably practicable following the occurrence of an early termination date. The Judge was required to decide whether GSI was entitled to summary judgment in circumstances where its notice was not served in compliance with that requirement.

Background facts

GSI and Videocon entered into a number of currency swaps under the umbrella of an ISDA Master Agreement. The judgment does not specify which, but it appears from the extracts quoted by the Judge that the parties entered into an agreement in the form of the 1992 Master Agreement. GSI terminated that agreement on 2 December 2011 following Videocon's failure to meet various margin calls.

GSI provided a notice setting out the amount it sought (approximately US$4 million) on 14 December 2011, and later applied for summary judgment. At the hearing of such application (in September 2013), Videocon was held to be liable to GSI in principle, but the judge at that hearing also decided that GSI had failed to provide the "reasonable detail" of its calculations which section 6(d) requires. It therefore failed to obtain judgment, and did not serve a revised calculation until March 2014.

Having done so, it made a second application for summary judgment, which the Judge was required to consider.

Section 6(d) of the 1992 ISDA Master Agreement

The relevant parts of section 6(d) are as follows:

"(d) Calculations

(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations ... and (2)...